Olympus audit panel: no violations in handover

TOKYO - A panel reviewing auditing at Olympus Corp said it had so far found no violations of accounting guidelines in the handoff to the Japanese arm of Ernst & Young from another auditor, which drew questions from a previous panel looking into a $1.7 billion (S$2.193 billion) accounting scandal.

The panel said in an interim report on Tuesday, however, that further examination was needed of the handling of the takeover by Ernst & Young ShinNihon LLC from KPMG AZSA LLC in 2009.

External auditors for Olympus have faced questions over whether they were tough enough in monitoring its books.

In a report early this month, an independent panel commissioned by Olympus to probe the matter took issue with whether the handover of auditing duties was thorough, and with the booking as goodwill of an M&A advisory fee that is central to the scandal.

The Olympus-appointed independent panel also said the managerial core of the company had become "rotten", in a damning report dissecting a decades-long practice of hiding investment losses.

Japanese police, prosecutors and financial regulators last week raided Olympus' offices and the homes of former top executives as authorities also step up their investigations.

Ernst & Young ShinNihon said an internal review of its Olympus audit found no problems, but it decided to seek an external check given the public attention on the scandal.

The Ernst & Young panel is chaired by Takashi Oizumi, a lawyer who once headed the Osaka High Public Prosecutors Office. Olympus also set up a separate panel of lawyers, following the independent panel's report early this month, to decide by Jan. 17 whether to file lawsuits against current and former internal auditors and whether external auditors performed their roles properly.